Test 6

A  Alan Greenspan

B  Janet Yellen

C  Jerome Powell

D  Ben Bernanke

A  an increase in the federal funds rate and an increase in the money supply

B  a decrease in the federal funds rate and a decrease in the money supply

C  a decrease in the federal funds rate and an increase in the money supply

D  an increase in the federal funds rate and a decrease in the money supply

A  tax rates

B  government spending

C  investment spending

D  the imports of the economy

A  buying government securities and lowering the discount rate

B  selling government securities and lowering the discount rate

C  selling government securities and raising the discount rate

D  buying government securities and lowering the reserve ratio

A  a discretionary fiscal policy

B  a restrictive monetary policy

C  an expansionary monetary policy

D  a prime interest rate policy

A  the Federal Reserve charges for short-term loans to commercial banks

B  banks charge for loans to the most creditworthy customers

C  is charged for government bonds sold in the open market operations of the Federal Reserve

D  banks charge for overnight use of excess reserves held at the Federal Reserve banks

A  changes required reserves to excess reserves

B  increases the discount rate

C  decreases the discount rate

D  increases the amount of excess reserves banks must keep

A  interest on reserves

B  the discount rate

C  the reserve ratio

D  open-market operations

A  The total demand for money is inversely related to the interest rate.

B  Bond prices and the interest rate are directly related.

C  The supply of money is directly related to the interest rate.

D  A lower interest rate raises the opportunity cost of holding money.

A  U.S. Treasury

B  Federal Reserve

C  Internal Revenue Service

D  Congress of the United States

A  provide the means by which checks drawn on the commercial bank and deposited in other commercial banks can be collected

B  protect the deposits in the commercial bank against losses

C  add to the liquidity of the commercial bank and protect it against a “run” on the bank

D  provide the Fed with a means of controlling the lending ability of the commercial bank

A  accepting deposits of gold for safe storage

B  using deposited gold to produce products for sale to others

C  issuing receipts for the gold stored with them

D  issuing paper money in excess of the amount of gold stored with them

A  set up the Troubled Asset Relief Program (TARP)

B  set up the primary dealer credit facility (PDCF)

C  set up the money market investor funding facility (MMIFF)

D  set up the commercial paper funding facility (CPFF)

A  overestimating the expected profits made by oil companies

B  underestimating the risk of losses on mortgage-backed securities

C  overstating the moral hazard problem

D  understating the benefits of devaluing the U.S. dollar

A  setting the Fed’s monetary policy and directing the buying and selling of government securities

B  handling the Fed’s collection of checks and adjusting legal reserves among banks

C  supervising the operation of banks to make sure they follow regulations and monitoring banks so they do not engage in fraud

D  acting as the fiscal agent for the federal government and issuing currency

A  federal government as does the U.S. Treasury

B  commercial banks and thrifts as does the Federal Deposit Insurance Corporation

C  commercial banks and thrifts as those institutions do for the public

D  the public as do commercial banks and thrifts

A  publicly owned and controlled

B  privately owned but publicly controlled

C  privately owned and controlled

D  publicly owned but privately controlled

A  controls the money supply

B  employs fiscal policy

C  buys corporate stock

D  uses price and wage controls

A  decrease the use of money as a medium of exchange

B  increase the use of money as a measure of value

C  increase the purchasing power of money

D  decrease the conversion of money to gold

A  20%

B  14.14%

C  25%

D  16.67%

A  legal tender

B  assets of the Federal Reserve Banks

C  token money

D  debts, or promises to pay

A  the confidence of the public in the ability of government to pay off the national debt

B  the gold bullion that is stored in Fort Knox, Kentucky

C  the belief of holders of money that it can be exchanged for desirable goods and services

D  the willingness of banks and the government to surrender something of value in exchange for money

A  No, because they provide a short-term loan to cardholders from a financial institution that issued the card.

B  Yes, because their value is included in the calculation of M 1.

C  Yes, because their value is included in the calculation of M 2.

D  No, because the card transactions are not insured by either the Federal Reserve banks or the U.S. Treasury.

A  legal tender

B  token money

C  a medium of exchange

D  fiat money